Ciena: An Always-Volatile Play On Telecom And Data Center Spending
Stephen Simpson, CFA
Stephen Simpson, CFA
Ever-Volatile Ciena Doing Well In 100G
Stephen Simpson, CFA
Stephen Simpson, CFA
Fri, Sep. 2, 11:55 AM
- Sets Equal weight rating down from Overweight and maintains a $23 target ($22.97 current price).
- Following Q3 earnings, Morgan Stanley analyst Meta Marshall notes: "Ciena's results highlighted increasing diversification of growth drivers and benefits of continued opex discipline. While we are encouraged by diversification and reduced volatility we think valuation has largely caught up with the current opportunity."
- Further: "Given optical remains an intensely competitive space, our view on product gross margin and operating margin growth is limited, but we do think Ciena's 15 percent operating margin target is potentially achievable during periods during peak cycles (FY17 and FY18), but $1.5–$2 remains the more normalized earnings power."
- Projects Q4 revenue of $716M and EPS of $0.44 ($723M, $0.48 previously). For FY 2017, projects $2.788B and EPS of $1.71 ($2.823B, $1.77 previously).
- Ciena (CIEN -0.9%) is up 7% since Wednesday's close, more than 20% on the month and is relatively unmoved (2%) over the year.
Thu, Sep. 1, 3:00 PM
Thu, Sep. 1, 7:01 AM
Wed, Aug. 31, 5:30 PM
Thu, Jul. 28, 10:05 AM
- Infinera (INFN -33.1%) beat expectations yesterday, but its demand and near-term revenue outlooks are bleak.
- The company projects Q3 revenue of $185M, +/- $5M. The midpoint of this guidance would denote a 20% Y/Y revenue decrease.
- Infinera has so far been downgraded at J.P. Morgan, Nomura, B. Riley & Co. and Raymond James.
- Management cites weakening demand in North America and Europe, long-haul win challenges and subsea business win rates lower-than-expected that the company expects to hurt revenue for a period of time going forward.
- This news comes only days after a strong cycle in the optical technologies sector was forecast.
- Other optical makers falling today include Lumentum Holdings (LITE -3.7%) NeoPhotonics Corporation (NPTN -4%), Fabrinet (FN -7.1%), Oclaro (OCLR -0.9%) and Ciena Corporation (CIEN -7.8%).
- Infinera earnings call transcript
Thu, Jul. 28, 9:16 AM
- Gainers: EVOK +31%. GRPN +29%. OCN +25%. ALR +20%. N +18%. ESI +15%. TPX +15%. GRUB +13%. LOGI +13%. VSTM +12%. CRUS +11%. ASPS +11%. CHCI +11%. EBIO +11%. AXTI +11%. VNR +9%. SPHS +9%. VGZ +8%. KONA +7%. CLF +6%. ARIA 6%. SPU 5%. YNDX 5%.
- Losers: INFN -32%. ARGS -18%. AVXL -10%. IVTY -10%. F -8%. CIEN -8%. CBD -8%. XCOM -7%. EXAS -6%. WFM -5%.
Thu, Jun. 2, 3:00 PM
Thu, Jun. 2, 10:13 AM
- Ciena (NYSE:CIEN) is up 11.9% out of the open after fiscal Q2 results where profits declined less than expected and revenue gains in Asia Pacific made up for Western declines.
- On a GAAP basis, net income fell 32%, while non-GAAP net income swelled slightly to $52.4M. Non-GAAP EPS fell to $0.34 from a year-ago $0.35.
- Gross margin rose to 44.2% from a year-ago 43.8% and the previous quarter's 43.9%.
- Revenue by segment: Networking platforms, $512.2M (up 1.9%); Software and Software-related services, $30.5M (up 27.6%); Global services, $98M (up 3.2%).
- By region: North America, $395.5M (down 0.4%); Europe, Middle East and Africa, $96.2M (down 5.9%); Caribbean and Latin America, $57.9M (up 20.9%); Asia Pacific, $91.1M (up 22.6%).
- For its Q3, the company is guiding to revenues of $655M-$685M (in line with expectations) along with gross margin in the mid-40s and opex of about $225M.
- Press Release
Thu, Jun. 2, 9:15 AM
Thu, Jun. 2, 7:04 AM
Wed, Jun. 1, 5:30 PM
Wed, Apr. 27, 5:41 PM
- Infinera (NASDAQ:INFN) has guided on its Q1 call for Q2 revenue of $255M (+/- $5M) and EPS of $0.17 (+/- $0.02), below consensus estimates of $272.2M and $0.22.
- The optical transport hardware vendor reports seeing "spending lumpiness" and uncertain investment timings among some clients. Rival Ciena (NYSE:CIEN) issued soft guidance in March, while blaming macro pressures and EMEA weakness. Juniper and Ericsson, which also have strong telecom capex exposure, have provided disappointing numbers this month.
- Infinera is now down 15.2% after hours to $13.20, after initially falling moderately in the wake of its mixed Q1 results. Ciena, which often goes in the same direction as Infinera, hasn't yet traded after hours since Infinera issued its guidance.
Tue, Mar. 22, 3:08 PM
- Infinera (INFN -6.7%) is off sharply after Microsoft (the world's #2 public cloud service provider) stated at the optical networking industry's annual OFC conference it prefers short-reach data center interconnect (DCI) modules that are built directly into Ethernet switches, rather than standalone DCI systems such as Infinera's Cloud Xpress.
- Microsoft's remarks came as chipmaker Inphi (IPHI +4.4%) unveiled a silicon photonics-based 100G transceiver for 80km DCI modules. Microsoft worked with Inphi to develop the solution, and provided a positive quote for Inphi's PR: "The ability to provide high bandwidth connectivity in a form factor that is smaller, uses less power and is less expensive than today's solutions is a benefit to Microsoft and the cloud market in general."
- Cloud Xpress has been expected to be a major growth driver for Infinera in the coming years, as major Web/cloud service providers continue rapidly building out their data center infrastructures. Infinera stated on its Q4 call (transcript) it had 20 Cloud Xpress invoice customers at the end of 2015, including "a number" of large Internet firms.
- While Infinera sells off, Ciena (CIEN +3.4%), which derives a large % of its sales from packet-optical systems that integrate Ethernet switching and optical transport functions, is rallying. Ciena entered the standalone DCI market last year through its Waveserver platform.
- MKM is defending Infinera, arguing today's selloff is an overreaction and that the Microsoft news was mostly priced in.
Thu, Mar. 3, 12:53 PM
Thu, Mar. 3, 10:34 AM
- In addition to missing FQ1 sales estimates (while beating on EPS), Ciena (CIEN -20.6%) is guiding for FQ2 revenue of $615M-$645M, mostly below a $644.6M consensus. The company also used its earnings call to lower its FY16 (ends Oct. '16) revenue growth guidance to 5-8% from 8%-9%; consensus is for 8.4% growth.
- Fellow optical networking hardware firms Infinera (INFN -4.7%) and Adtran (ADTN -2.5%) are also lower. As are optical component firms NeoPhotonics (NPTN -9%), Fabrinet (FN -2.4%), Oclaro (OCLR -3.1%), and Lumentum (LITE -2.1%). NeoPhotonics jumped yesterday in response to strong earnings/guidance; Fabrinet and Oclaro did the same in February.
- Ciena reports seeing "some recent volatility in the broader macroeconomic environment." On the call, the company mentioned its EMEA sales are soft, and that it's making changes to deal with the issue.A strong dollar is also cited as a headwind. Ciena nonetheless expects to post above-market growth outside of EMEA.
- Ciena's top-line performance: Networking platforms revenue (packet-optical systems, optical transport systems, and Ethernet switches) rose 9% Y/Y in FQ1 to $449.5M. Software and software-related service revenue (inc. the Blue Planet SDN platform) rose 8% to $25.4M. Global services revenue rose 7% to $98.2M. One customer (AT&T?) accounted for 22% of revenue, and the U.S. overall accounted for 63.7% of revenue.
- Financials: Adjusted gross margin was 44.7% vs. 44.9% in FQ4 and 44.1% a year ago; GM is expected to be in the mid-40s once again in FQ2. Controlled spending helped adjusted op. margin rise 150 bps Y/Y to 8.3%. Ciena ended FQ1 with $995M in cash and $1.26B in long-term debt.
- JPMorgan is defending Ciena: The firm considers the FY16 revenue guidance cut reasonable given macro pressures, and thinks shares don't deserve to sell off more than a few percent. (source: Notable Calls)
- Ciena's FQ1 results, earnings release
Thu, Mar. 3, 9:15 AM